snapshot 8/30/07

Apple seen revamping iPod line
Apple Inc. shares rose more than 5 percent on Wednesday on growing expectations that the company will announce a revamped line of iPods next week. Technology news Web sites have speculated that Apple could launch a new video iPod with a large touch screen similar to the iPhone, and a redesigned iPod nano in time for the end-of-year holiday shopping season.


Sony ditching Connect music service
Acknowledging its proprietary audio technology was a marketplace flop, Sony Corp. said Thursday it plans to shutter its Connect digital music store and open its portable media players to other formats. The moves were announced Thursday at a Berlin consumer electronics trade fair as the Japanese electronics pioneer unveiled a pair of new digital Walkmans that can play the Windows Media Audio, MP3 and AAC audio formats.

Sony said it would phase out operations of its struggling Connect online retailer, which sold songs in the company's proprietary ATRAC format. "This gives customers greater flexibility in their music software approach," the company said in a statement. "As a result, Sony will be phasing out the Connect Music Services based on Sony's ATRAC audio format in North America and Europe." In an e-mail sent to Connect users, the service said it would not close before March 2008, but it did not set a more specific date. The company's Connect e-book service for the Sony Reader is not affected.


Controlling Access--Activation and DRM
You're selling something digital (software, music, video, e-books, whatever), and you want to make sure that people actually buy it. Broadband penetration is higher than ever, fast file-sharing software like Bittorrent is easier to use than ever, and about 30 seconds of searching on any number of sites will turn up just about any digital thing worth having. In short, it's downright trivial for people to steal what you're trying to sell. The RIAA's propensity to troll with a wide net of random lawsuits notwithstanding, it's really very hard to catch the thieves in that great anonymous, international cloud of the Internet. And as we all know, "free" always wins.

So how do you make sure that the people who use your stuff actually paid for it? One method is to use Digital Rights Management, of course. "DRM" is a blanket term that gets thrown around a lot these days. The loudest voices don't seem to truly understand it (which makes sense: understanding it takes the fear away, so people with a good handle on DRM don't tend to scream "the sky is falling" over it). DRM is, simply put, a software mechanism that "manages" your "digital rights." This can be anything from the DRM Microsoft has developed for Windows Media (audio and video, though certainly it's possible to create WMV and WMA files that are DRM-free), to the FairPlay DRM added onto all the AAC files that Apple sells on the iTunes Music Store, to the stuff attached to Blu-ray and HD DVD movies.


Handleman Posts Widened Losses, Pushes Diversification
US-based retailer Handleman posted stronger revenues during the most recent quarter, though losses widened. The company disclosed revenues of $274.2 million for the three-month period ending July 28th, a 14 percent bump over year-ago figures of $240.4 million. Losses totaled $17.7 million, or $.88 per diluted share, compared to year-ago losses of $5.9 million, or $.30 per diluted share.

Handleman chairman and chief executive Stephen Strome pointed to a major downturn from music-related assets, particularly CDs. Specifically, music-related losses topped $13.8 million, according to the company. "Although our operating performance improved over last year's first quarter, the music industry continues to decline and impact our music revenues," Strome noted. "As a result, we are taking actions to further reduce costs and improve operating performance as well as initiate opportunities for diversification."


Video gaming to be twice as big as music by 2011
Hence our ears perked up when Ubisoft CEO Yves Guillemot said last week that the video game market was poised for massive growth—a 50 percent increase over the next four years. Assuming that Guillemot isn't simply blowing fumée about his industry's growth potential (always a possibility at these kind of events), video games will soon run eclipse both box office revenues and recorded music revenues. That a lot of copies of Halo to move; is gaming really ready to get this big? Let's run the numbers.

Gaming had some major growth, but much of it was in the past, when the industry surged from $2.6 billion in sales to $7 billion between 1996 and 2000. Over the last five years, though, none of the three categories has shown much evidence of explosive growth. Music (which includes CD sales, digital sales, music video sales, and mobile song downloads), in fact, has dropped from a peak of $14.58 billion in 1999 to only $11.5 billion in 2006, and it is expected to fall even further by 2010.


Nokia Music Store – First Take
Nokia today announced their much anticipated digital music strategy. So was it worth the wait? Well the devices were, the latter two Xpress Music devices in particular from a music perspective. The three way sync is also a nice, innovative alternative to dual delivery. But beyond that, the music service is a disappointment. The music subscription service is a PC only streaming service that does not support portable downloads and as such is a generation behind current offerings. And it begs the question, why is a mobile handset manufacturer launching a music subscription service which does not support portable downloads or mobile streaming? Similarly the download service is essentially a ‘me too’ offering, based around 99 cents, windows DRM wrapped single track downloads.


First Zune 2 and Zune Flash Shots
Here are the first shots of the Zune 2 and Zune Flash. The images reveal an 80GB version and a 4 and 8GB flash model.